Toronto Real Estate Board: Expect Single-Digit Price Increases Through 2017
The Toronto Real Estate Board’s June Market Watch outlined a number of key trends in Toronto and surrounding area real estate. An increased supply of listings has led to less price growth than we have been used to seeing in the market, but the price growth is still healthy at 6.3% year-over-year.
Tim Syrianos, TREB President, had this to say about the current state of affairs. “We are in a period of flux that often follows major government policy announcements pointed at the housing market. On one hand, consumer survey results tell us many households are very interested in purchasing a home in the near future, but some of these would-be buyers seem to be temporarily on the sidelines waiting to see the real impact of the Ontario Fair Housing Plan. On the other hand, we have existing home owners who are listing their home because they feel price growth may have peaked. The end result has been a better supplied market and a moderating annual pace of price growth.”
As a short-term impact, housing price increases have cooled over the double-digits that we are used to seeing, but eventually those putting off purchasing a home will dive into the market again, which will spur more robust numbers. TREB predicts a single-digit increase similar to June’s for the rest of 2017 as the market continues to respond to the Ontario Fair Housing Plan and rates from the Bank of Canada increase – a prediction which did come true.
May Consumer Data shows repeat purchasers up, first-home down
Before the Bank of Canada increased interest rates, TREB’s May consumer data showed that potential buyer numbers have increased since November, but first-time buyer interest had fallen off the map due to the Ontario Fair Housing Plan and other government measures designed to raise the bar of entry to home purchasing in order to discourage first-time buyers from overleveraging themselves.
Condominium price increases remain high in the 20% range, mostly because this is what first-time buyers can afford.
Number of Sales on Higher-Priced Properties Downtick
Higher-priced property categories such as detached and semi-detached homes have seen the year over year number of sales plummet in the 30% to 40% range. As Syrianos mentioned, many are holding back on purchasing until they see what the market does. Condo sales numbers posted the lowest decrease, with an average of -23.4% across Toronto and the GTA.
The good news here is that while number of transactions have decreased, prices have not – and TREB predicts they will continue to post moderate increases throughout the year. As the May consumer data shows, buyers are willing – they are just waiting to pull the trigger.
Read the TREB June Market Watch here.